The latest TV ad from controversial payday loan company Wonga has been banned by the Advertising Standards Authority.
The ban comes after the ASA received 31 complaints from from viewers claiming the ad was "misleading".
Payday loan companies have been criticised for getting people into debt through high interest repayments.
Some people argue it's far too easy for people to take out payday loans, with most not doing credit checks.
The Wonga advert claims to explain how the interest rate they have to show is almost misleading about the real cost.
The advert says,
"Right, we're going to explain the costs of a Wonga short-term loan"
"Some people think they will pay thousands of per cent of interest"
Many viewers felt this was an attempt by Wonga to "trivialise" RAPR and the real cost of taking out a payday loan
The recent complaints over the Wonga advert were due to four main points; the ASA listed these as,
- Most complainants challenged whether the ad was misleading, because it confused as to the interest rate applied to a Wonga loan
- Some challenged whether the ad was misleading, because it implied that the representative APR (RAPR) was irrelevant to a short-term loan.
- Some challenged whether the ad was irresponsible, because it encouraged viewers to disregard the RAPR and thereby trivialised the decision to take out a short-term loan.
- A few challenged whether the ad breached the Code, because the RAPR was not sufficiently prominent.
The ASA agreed the advert was not incorrect but did feel it was misleading, they said,
"Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5853% of the loan, we were nevertheless concerned that viewers would be left without a clear understanding of how the information in the on-screen text could be applied to a Wonga loan, given the ad's assertion that the representative APR was not indicative of the cost of the loan.
Before anyone takes out a payday loan it's important they have a clear strategy on how they will repay the high interest loan.
If it's possible to borrow from friends or family this route should be taken because it will save them money and is less likely to lead to debt problems.